Iraq 20 Years after the US Invasion: Challenges and Continuity

Two decades after the US invasion of Iraq, the civil war of the years that followed and the ravages of the Islamic State have faded into the background. Yet the country remains shaken by internal cleavages, torn apart by corruption, and vulnerable to influence operations by external actors. Overcoming economic crisis and infrastructural shortcomings could contribute to greater political stability. Oil production has doubled over the past two decades. The historical underdevelopment of the Iraqi oil sector has been reversed, yet the federal oil law has been contested between Baghdad and Erbil. Natural gas production has grown in recent years as well, but still falls short of providing enough energy to the power grid. The country is a net importer of natural gas, relying on supplies from Iran. Oil remains paramount for the Iraqi state, its budget, exports, and its economy. Heavy industries like fertilisers and petrochemicals could enhance the value chain of Iraq's primary resources that include the second-largest phosphate reserves worldwide. Population growth in Iraq is still high. Beyond hydrocarbons, economic diversification in other areas is urgently needed. This could include alternative energies, light industries, education, services, water management, and a reorientation of agriculture. Iraq ranks 157 out of 180 in the Corruption Perception Index of Transparency International. Its consociational muhasasa system, which allocates power along sectarian lines, is abetting such corruption and thus requires reform. Iraq can be a vital partner for European energy cooperation and not only in hydrocarbons, but competition from China is stiff. Europe is already eyeing collaboration with Middle East and North Africa countries on the production of green hydrogen. Interconnectors of electricity grids within and beyond the region as well as storage solutions are needed to increase the share of renewables involved in power generation.